Posts Tagged ‘toyota shortages’

The production cuts will likely make it more difficult to find the new 2012 Toyota Camry.

Toyota’s ambitious turnaround plan is in for another setback, the maker issuing a terse news release indicating it will be forced to trim U.S. production due to parts shortages caused by flooding in Thailand.

The announcement comes just days after Honda revealed it will also have to slash production on its North American assembly lines due to flooding that has put much of Thailand underwater – drowning not only the big Honda assembly plant near Bangkok but a number of that country’s key automotive suppliers.

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“Flooding in Thailand continues to necessitate adjustments in Toyota’s production hours,” Toyoda said in its statement. “To conserve the affected parts, all North American vehicle assembly plants will suspend overtime the week of November 7.”

While the production cuts at Toyota appear to be modest they couldn’t come at a worse time for the maker which lost more than 700,000 units of production worldwide since spring due to the earthquake and tsunami that devastated Northeast Japan.

“We’re back,” proclaimed Didier Leroy, the CEO of Toyota of Europe, as he began the maker’s press preview at the 2011 Frankfurt Motor Show.

That might have seemed an odd thing to say less than a year ago, when Toyota seemed to have unstoppable momentum. But that was before the Japanese earthquake of March 11 that brought the country’s auto industry to a near stop. In the months that followed, Toyota lost about three-quarters of a million units of production.

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Working frantically with its suppliers, the maker says it has not gotten its plants in Japan, the U.S. and Europe back up and running at normal capacity as of this week. Now it has to play a game of catch-up.

Toyota will count on an array of new products, including an update to the Camry, to help drive big sales growth in 2012.

Even as it prepared to report a 99% drop in its global earnings, Toyota was telling its worldwide supplier network to buckle up and get ready for a fast ride as it lays out plans for record production — backed by one of the most aggressive product roll-outs in its history.

Reports out of Tokyo indicate that the Japanese giant intends to come back from the setbacks of the last two years by launching a big growth effort that could boost production to a record 8.9 million in 2012. That would be nearly a million more than Toyota said, on Tuesday, it will build this year.

It has been a tough couple years for the maker – which is expected to lose its crown as the world’s largest automotive manufacturer this year. In 2010, it was hammered by a series of safety-related problems, at one point idling a number of plants to make repairs. This year, Toyota has been struggling to overcome the effects of the March 11 Japanese earthquake and tsunami which – during the first quarter of its fiscal year alone – cost it nearly 600,000 units in lost production.

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But Toyota officials tell TheDetroitBureau.com that they are moving ahead on the global expansion program announced by CEO Akio Toyoda – ironically just days before the Japanese disaster. And now, the maker confirms, it is telling its suppliers to get ready to support the push.

According to a report in Japan’s Kyodo News, Toyota plans to boost production at its Japanese assembly network to 3.5 million in 2012, adding another 5.4 million vehicles at “transplant” assembly lines in the U.S., Europe, China and other parts of the world.

Not long ago seen as the auto industry’s invincible 800-pound gorilla, the problems keep piling up for Toyota, and that’s worrying the folks who have to put a rating on the maker’s debt – Moody’s downgrading Toyota and warning it could cut the debt rating again in the months ahead.

The Japanese giant still commands the investment-grade rating its Detroit rivals can only dream of, but the latest move by the powerful ratings service underscores growing concerns about Toyota’s ability to cope with problems ranging from quality to new competitors, as well as the setbacks it has suffered in the wake of the March 11 disaster in Japan that will likely reduce its production this year by close to 500,000 vehicles.

It will “take some time,” a statement from Moody’s Investor Services said, for Toyota to “recover its previous strong profitability.”

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As a result, the agency lowered from Aa2 to Aa3 – which is still its fourth-highest credit ranking. But it follows a downgrade earlier this year by Standard and Poors, and Moody’s warned that yet another downgrade could come soon because Toyota’s ratings “incorporate one notch of support from the country’s banks and government, which are themselves under review for possible downgrade.”

Toyota is struggling to make up production of the Prius lost due to Japan's March 11 earthquake and tsunami.

With operations at most of Japan’s automotive supplier and assembly plants starting to return to normal, manufacturers are putting out the Help Wanted signs as they race to make up for lost production.

Toyota and Honda alone expect to add up to 5,000 temporary workers in a bid to boost their output during the second half. Other makers, including Nissan, plan to hire new workers, as well.

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Toyota now hopes that it can add an extra 350,000 vehicles to its assembly schedule during the second half of the fiscal year ending next March, said Senior Managing Director Takahiko Ijichi, which would reduce its overall production losses to about 450,000 cars, trucks and crossovers.

Toyota now expects to have production of all 12 models built in North America back up to normal by September.

Working with suppliers – and finding alternative sources, where necessary – Toyota today said it expects to have its North American vehicle production back to normal by September, notably earlier than it originally feared following the disastrous Japanese earthquake and tsunami of March 11.

The entire Japanese auto industry has been feeling the pinch of parts shortages resulting from the March disaster, which struck Japan’s northeast coast, killing tens of thousands and damaging or destroying 100s of automotive parts facilities.

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Like most of the Japanese competitors, Toyota’s home market plants were shuttered for the better part of a month and its entire global factory network has been operating well below capacity since then. Toyota was particularly vulnerable, however, because it produces significantly more vehicles in Japan than key rivals Nissan and Honda.

Toyota expects to make up much of its lost production of vehicles like the RAV-4 during the second half of its current fiscal year.

Toyota’s balance sheet will take a significant hit as a result of the earthquake and tsunami that struck Northeast Japan earlier this year, the disaster now forecast to reduce the maker’s profits by 35% for the current fiscal year.

The maker’s operating profit is expected to slip to 300 billion yen, or $3.7 billion at the anticipated exchange rate of 82 yen to the dollar – which is also significantly lower than the consensus forecast of 434 billion yen anticipated by 23 analysts surveyed by Thomson Reuters. But Toyota officials now say they also anticipate a faster recovery than first feared, with production during the second half of the fiscal year, which began on April 1, running substantially higher than originally planned.

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“We will enter a phase of production make-up and recovery and will make up for lost production to the tune of 350,000 units,” said Senior Managing Director Takahiko Ijichi, during a conference call this morning, “so the overall unit production decrease would be 450,000 units” for the full fiscal year.

Strong, early demand is leading Toyota to sharply increase production of its all-new Prius V hybrid, the second model in an all-new brand-within-a-brand of gas-electric vehicles.

The maker – still struggling with production cuts due to the March 11 Japanese earthquake and tsunami – hopes to start rolling out 5,000 of the Prius V hybrid wagons by August or September, up from initial plans to build 3,000 a month.

Toyota is hoping that the Prius V will help sales of its hybrid models rebound from an unexpected slowdown in the key U.S. market once it goes on sale in the fall.

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Known in the U.S. as the Prius V, but sold elsewhere as the Prius Alpha, the new hybrid will be the second model to bear the familiar Prius badge. Toyota plans to create an entire line-up of gas-electric models sharing the Prius name, including a small hybrid, tentatively dubbed Prius C, due to reach market about a year from now. A plug-in version of the original Prius will also be introduced in 2012, and the maker hints other hybrid models could follow.

The Japanese parts shortage will mean shortages of the new Honda Civic - and a number of other models.

Honda has warned its U.S. dealers that it will be further cutting production due to the ongoing shortage of Japanese-made parts – which will likely result in a shortage of many products including the all-new Civic compact, which is just in the midst of what was supposed to be a high-profile launch.

The shortages will also force Honda to delay by at least a month the planned autumn launch of the updated 2012 CR-V crossover vehicle.

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Honda is not the only maker feeling the pinch, however. Toyota, in particular, expects significant product shortages in the months ahead, and has delayed several key launches. Meanwhile, even Detroit makers are preparing for production delays, Chrysler today warning it could see its original 2011 production plans reduced by as much as 100,000 vehicles.

“Our goal remains to normalize overall production sometime around the end of the year,” John Mendel, executive vice president of sales for American Honda, told U.S. dealers in a written memo.

General Motors has gone to war. Struggling to avoid the sort of parts shortage problems crippling its Japanese rivals, the maker has assigned several hundred managers to three “war rooms,” in Detroit, Tokyo and Shanghai, with the aim of keeping its assembly lines stocked and running.

That’s no easy task in the wake of the March 11 earthquake, tsunami and subsequent nuclear plant disasters that all but shut down the Japanese auto industry for more than a month. Toyota alone lost about 542,000 units of production in March, it revealed this week, and the global sales leader does not expect to have its worldwide production network back up and running at full speed until November or December.

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Toyota is by no means alone, the March disaster hitting hard all of the Japanese automakers – and impacting virtually all major car companies worldwide to at least some degree. GM, in fact, was forced to briefly close a plant in Louisiana, with two European plants also affected. But the maker is working hard to ensure even worse problem don’t develop. And if it can keep things running reasonably smoothly, industry analysts say GM will likely end 2011 as the global sales leader, a title it lost three years ago, shortly before its bankruptcy.

“The war rooms stay in touch around the clock and have the authority to move parts around as needed,” explained Tim Lee, head of GM International Operations.